9911796707
TMI Blog2005 (2) TMI 94X X X X Extracts X X X X X X X X Extracts X X X X ..... he Revenue has not disputed the payment of Rs. 12 lakhs by the assessee to the licensor. The only contention of the Revenue is that there is no obligation for the assessee to pay the lease rent to the licensor under the agreement dated December 29, 1979, and therefore the assessee is not entitled for deduction and the Revenue brought the same to tax. Merely because the Revenue refuses to accept the claim of the assessee and treated the same as income it cannot be said that the assessee has concealed the income. In order to justify the levy of penalty the circumstances must show that the assessee is having an intention to conceal the income and to evade the payment of tax. In this case the assessee showed the payment of Rs. 12 lakhs to the l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sment year 1980-81 declaring an income of Rs. 700. The assessee claimed deduction of Rs. 12 lakhs being the lease rent paid to its licensor among other deductions. It is the claim of lease rent of Rs. 12 lakhs which is in controversy in this lis. The Income-tax Officer by his order dated March 14, 1983, passed a draft assessment order disallowing the claim of Rs. 12 lakhs under the head Lease rent as the same is not taxable. Following the direction of the Assistant Commissioner of Income-tax under section 144B of the Income-tax Act, 1961 ("the Act", for short), the Income-tax Officer passed an order of assessment on September 16, 1983. The Commissioner of Income-tax (Appeals) confirmed the assessment order of the Income-tax Office ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... te tax dues. Merely because the Income-tax Officer disallowed a claim of the assessee shall not result in levy of penalty under section 271 of the Act. Reliance is placed on the following decisions: (1) Shiv Lal Tak v. CIT [2001] 251 ITR 373 (Raj); and (2) National Textiles v. CIT [2001] 249 ITR 125 (Guj). 5. Per contra, Sri M. V. Seshachala, learned standing counsel for the Revenue, contends that the failure of the assessee in not justifying the claim of Rs. 12 lakhs as lease rent amounts to a false claim and therefore the levy of penalty is just and proper. There is deemed furnishing of inaccurate particulars and consequently the assessee is liable to pay penalty under section 271 of the Act. Reliance is placed on the following decis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... December 29, 1979, by paying a sum of Rs. 12 lakhs to the licensor as lease rent in full and final settlement on March 30, 1980. The assessee in their returns claimed allowance of Rs. 12 lakhs as payment towards lease rent to the licensor. The Income-tax Officer disallowed this claim of the assessee on the ground there is no obligation on the part of the assessee to pay lease rent under the agreement dated December 29, 1979 and therefore the same was brought to tax and the assessee has paid the tax on the disallowance of Rs. 12 lakhs. 9. The Revenue has not disputed the payment of Rs. 12 lakhs by the assessee to the licensor. The Revenue refused to accept this payment of Rs. 12 lakhs as lease rent and therefore the same was brought to tax. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... shall apply to a case referred to in clause (B) in respect of any amount added or disallowed as a result of the rejection of any explanation offered by such person, if such explanation is bona fide and all the facts relating to the same and material to the computation of his total income have been disclosed by him...." 10. In National Textiles v. CIT [2001] 249 ITR 125 (Guj), it is held as follows: "In order to justify the levy of penalty, two factors must co-exist, (i) there must be some material or circumstances leading to the reasonable conclusion that the amount does represent the assessee's income. It is not enough for the purpose of penalty that the amount has been assessed as income and (ii) the circumstances must sh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... our opinion, it has to be so construed as to harmonise it with the basic principles of justice and fairness as in the case of the original Explanation. We are guided by the commentaries of the learned authors Kanga and Palkhiwala, Law and Practice of Income-tax, volume 1, pages 1637, 1639 and 1640." 11. In CIT v. Santhosh Financiers [2001] 247 ITR 742 (Ker), it is held as hereunder: "Whether there is concealment to make the penalty exigible is normally a question of fact and also as to whether the burden of proof in a given case had been discharged on a set of facts is also a question of fact. The Appellate Tribunal, on the facts, found that the assessees have not concealed any particulars of income or furnishing of inaccurate ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
